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China audits conglomerate amid corruption claim

Updated at: 07/19/2013 9:05 AM
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(AP) BEIJING - The Chinese government said an audit of a giant state-owned conglomerate is under way, an apparent response to corruption allegations a Chinese journalist issued against the company chairman and other top executives.

The official Xinhua News Agency reported Friday that the agency that supervises state assets said an audit of China Resources Group was under way and that any wrongdoing, if found, would be punished.

A Chinese journalist on Wednesday published a letter online accusing the conglomerate’s chairman Song Lin and top executives of its subsidiary, China Resources Power, of deliberately overpaying for an acquisition in 2010.

The journalist Wang Wenzhi, who works for a newspaper run by Xinhua, said the executives were responsible for the loss of several billions of yuan in state assets.

China Resources Group, which reported a profit of $5.3 billion last year, has denied wrongdoing, posting a statement on its website saying such reports have included "a lot of conjecture, speculation and malicious slander" that has affected the company and its top executives’ reputations.

It said that the conglomerate has always operated according to national laws and regulations and acted in the interests of its shareholders and the public.

China Resources Group operates in sectors ranging from power supply to gas to real estate to medicine.

The allegations surface as China’s new leaders have pledged to crack down on the rampant corruption that pervades the Communist Party and government.

Song’s position is equivalent to that of a vice minister in the Chinese government, making him among the most senior officials to have come under scrutiny by efforts that appear to be independent of the party’s own anti-graft agency.

In May, authorities announced that an investigation had been launched into Liu Tienan, a powerful economic planning official who had been accused of corruption by a prominent journalist.